Oil gets limited profit-hunting boost; caution caps gains

Oil prices firmed on Thursday, as bargain-hunting by traders and relief over geopolitics helped provide a modest boost to crude after days of selling.

Benchmark oil is still down over 4 percent so far in September, on track for its biggest monthly fall since April. It is down nearly $8 from its peak earlier in the month as fears have faded about conflict in the Middle East.

That steep decline has brought some buyers back in the market, analysts said, but the demand/supply balance was also capping prices, analysts said.

Supply was recovering from Libya, and bigger U.S. stockpiles were putting pressure on prices.

Brent crude surrendered early gains to trade up 30 cents to hover under $109 a barrel, after slipping to $108 earlier in the session. U.S. crude futures settled up 37 cents at $103.03 per barrel and above Wednesday's nearly 2 month low.

The spread between the two benchmarks widened to $5.91 from Wednesday's close of $5.66.

Iran's new government said on Wednesday it wanted to jump-start talks with world powers to resolve a decade-long dispute over its nuclear program and hoped for a deal in three to six months.